MC Wholesaling Pty Ltd v Zheng

[2024] VSCA 248

Victorian Court of Appeal

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Interrogate

Catchwords

1. Costs
2. › Indemnity costs
3. › General discretion as to costs
4. › Allegations of fraud subsequently discontinued
5. › Whether allegations of fraud 'at heart of' proceeding warranting departure from standard basis
6. › Supreme Court Act 1986 (Vic), s 24
1. Costs
2. › Indemnity costs
3. › Calderbank offer
4. › Whether rejection of Calderbank offer unreasonable
5. › Whether party joined after offer's rejection entitled to benefit of offer
1. Costs
2. › Non-party costs orders
3. › Order against sole director of corporate litigant
4. › Whether corporate party required to be insolvent or 'person of straw'
5. › Whether director was 'driving force' behind litigation
6. › Whether director's control of corporate finances relevant consideration
7. › Supreme Court Act 1986 (Vic), s 24
1. Costs
2. › Variation of previous costs orders
3. › Whether judge entitled to vary interlocutory costs orders from standard to indemnity basis in light of subsequent discontinuance

Quick Take

A corporate party is not required to be insolvent or a 'person of straw' before a non-party costs order against its director may be appropriate in the interests of justice. Where a sole director causes a company to make and maintain serious allegations of fraud, unreasonably rejects a Calderbank offer, refuses to discharge freezing orders disproportionate to the claim, and then discontinues without explanation, the director's conduct may go beyond ordinary directorial functions and justify a personal costs order. However, there is a difference of opinion within the Court of Appeal as to whether a director's control over the corporate party's ability to pay costs is a relevant consideration absent a finding that the director would actually deal with assets to defeat the costs order. A party joined to a proceeding after a Calderbank offer was rejected may receive the benefit of that offer where the same substantive allegations were made against both the offeror and the later-joined party.